Refund check from Financial aid...

[mightymouse23]

Guys,

Just wanted to know if anyone invests any portion of the refund check received from Financial Aid. If so, what type of investments do you make?

Thx

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[jackbauer!]

Guys,

Just wanted to know if anyone invests any portion of the refund check received from Financial Aid. If so, what type of investments do you make?

Thx

I'm not sure it is very wise (or even legal?) to invest your financial aid money. Remember, if you're investing in stocks trying to beat your interest rate, not only are you paying a risky game but you will also be stuck paying high capital gains taxes because you're investing short term.

A better idea: sock your leftover money in a high yield savings account (HSBC's is 5.05%), pay everything with a cash back/airline rewards credit card, and pay off your credit card in full each month with your savings account.

jb!

 

[small]

Under what scenario would investing your loan actually be profitable? Only if one doesn't really need the money AND are sure that one can beat the 6.8% or more interest rate would it seem like it might work. Would you even qualify for Stafford Loans/low-interest loans if you're well-off enough not to need them? I'm also kind of curious to know if any of the few people on SDN have actually tried this (loan-funded trips to Vegas included!).

 

[jackbauer!]

Under what scenario would investing your loan actually be profitable? Only if one doesn't really need the money AND are sure that one can beat the 6.8% or more interest rate would it seem like it might work. Would you even qualify for Stafford Loans/low-interest loans if you're well-off enough not to need them? I'm also kind of curious to know if any of the few people on SDN have actually tried this (loan-funded trips to Vegas included!).

I doubled up some of my loan money in Atlantic City if that counts!

jb!

 

[MarkND]

Under what scenario would investing your loan actually be profitable? Only if one doesn't really need the money AND are sure that one can beat the 6.8% or more interest rate would it seem like it might work. Would you even qualify for Stafford Loans/low-interest loans if you're well-off enough not to need them? I'm also kind of curious to know if any of the few people on SDN have actually tried this (loan-funded trips to Vegas included!).

Bad idea!! Trust me, I HAPPEN TO KNOW THIS FIRST HAND!!!! Then, you'll have to thin down till the next semester

 

[alphabetsoup]

I wish high interest savings accounts were 5%. They are at 3% now!

 

[jackbauer!]

I wish high interest savings accounts were 5%. They are at 3% now!

sucks.

 

[TempleDMDKrazd]

i think if you have a lot of excess money left over...maybe next year you want to take out less...because it sucks when you have to pay interest....but it sucks more when you have to pay interest on interest....sucks even more to pay interest on interest on interest....etc...

 

[crazy_sherm]

If you have extra money you don't need, just return it. There's no prepay penalty with our student loans. Then take out less next time. As someone stated, you'll need to invest in something that has a return of more than 6.8% and even then, you'll probably be only making a few bucks unless you took out $100k too much or something.

 

[KOM]

ING savings is what I used to do. They were at 4% or so not too long ago. I bet they're barely breaking 3% now with the current state of the economy.

 

[small]

I just opened an eOne account with Salem Five (thanks jackbauer! for mentioning high yield savings accounts). It's an online only thing, no monthly fees or whatever, refunds ATM fees up to $15 total a month, and pays out 3.0% currently. Not sure if HSBC refunds ATM fees or not, and they only have machines in the NE. Anyway, something like this is good for the money we get for living expenses. It might not add up to a lot of money, but it's better than nothing.

 

[small]

I doubled up some of my loan money in Atlantic City if that counts!

jb!

Nice!

 

[WolverineTrojan]

Take this from someone who works at a bank...

budget your expenses for both semesters, if you still really dont need the money now but could find potential use for it in the near future...put it into a Certificate of Deposit (CD). You wont be able to touch your money for a certain period of time (3 months minimum) but this could also be a plus because you dont have to worry about spending any of the funds (which would be the case if you opened a high interest savings) and your money would accrue the maximum amount of interest because it isnt being spent.

You cant lose with a CD or savings account theres no risk...

but if you have absolutely no use for it...i agree give it back.

 

[pietrodds]

It is illegal to invest student loans. And you're just screwing yourself in the end by taking on unnecessary risk. You'll have the rest of your career to invest but get the degree first! Live as cheaply as possible in D school and this means taking out as few loans as possible with the lowest possible interest rates. You're not going to find guaranteed investments delivering returns of 9 or 10% to make it worth while... did I mention that it's illegal!?!

 

[mightymouse23]

just out of curiosity why is it "illegal"? I mean I have seen people lease lexuses and do much more irresponsible things with their money, than what I propose. And the only reason I would take out the money to begin with is to use it as a safety net for my home mortgage...

And my idea of investing was to place it in a CD or money market account. Nothing too fancy.